Chan Yat San and Others v. Attorney General

HCMP000027/1975

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

MISCELLANEOUS PROCEEDINGS NO. 27 OF 1975

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Coram: Huggins, J.

Date of Judgment: 31st July 1975.

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JUDGMENT

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1. This is a representative action on behalf of all the members of a club. This club occupies land in the New Territories and it desires that its members should be able lawfully to engage in activities which, unless the premises are licensed by the Commissioner of Police under the provisions of s.13 of the Gambling Ordinance, would be a common gaming house. The Commissioner has refused to issue the required licence and the Plaintiffs seek declarations which in substance would be to the effect that the Commissioner has acted unfairly. Membership of the club is now confined to:

"All directors of Pearl Island Investment Limited the staff thereof and their relatives and friends who are in good conduct and willing to comply with the provisions of the club",

but it is intended to extend the eligibility. Members are entitled to invite two guests to the club upon payment of an admission charge for each guest. The land occupied by the club is owned by Pearl Island Investment Company Limited (to which I shall hereinafter refer as "the company") and include a hotel. The company has sold a number of flats already erected on the island and the planned development includes a total of 224 flats. It is intended to provide club facilities for the occupiers of the flats, the hotel patrons and the existing members of the club.

2. It is an offence under s.6 of the Ordinance to keep a common gaming house. A "common gaming house" is defined in s.2 and the material parts of the definition are:

".... any place opened, kept, or used -

It will be seen at once that the club could permit its members to indulge in a wide variety of games of chance or what are surprisingly described as "mixed games of chance and skill" without the necessity of a licence. However, I am told that the officers of the club, while they do not intend that the club shall benefit directly from any gaming which may take place, are fearful lest some of its members might be found engaged in a game (whether "mixed" or not) which brought the premises within the definition of a common gaming house. They therefore applied for a licence, the application being dated 3rd December 1973. Eventually, on 4th March 1974, the Commissioner of Police replied that in the exercise of his discretion he had decided not to grant a licence. No reason was given either for the delay in replying or for the refusal of the application.

3. On 11th April the club invited the Commissioner to reconsider his decision. Their solicitors emphasised what appeared to them to be the club's qualifications for holding a licence and asked that, if the application was again rejected, the Commissioner should disclose the grounds of his "objections". That letter was followed by another, dated 6th May, in which the solicitors advanced further arguments in support of the application and included the rather strange paragraph:

"It is the opinion of our clients that it will be impossible to operate this club even on a non-profit making basis unless the club can permit its members to play primarily cards, mahjong and tin kau".

I say "strange" because it would be lawful for members to play mahjong, tin kau and many games of cards without a licence, provided that the club did not benefit in any of the ways mentioned in para.(d) of the definition of "common gaming house". Be that as it may, on 17th May 1974 the Commissioner declined to change his decision and to disclose the reasons therefor.

4. The first hint of the Commissioner's reasons was given in an affidavit filed the day before the trial. This affidavit was sworn by Senior Inspector Wong Chee-fung on 13th June 1975. The Plaintiffs had alleged that 77 licences had been granted to other applicants and their submission to the Commissioner was that they themselves were better qualified than all of them. Mr. Wong gave a list of 92 persons who had been issued licences and pointed out

"[t] hat the following features are noteable about the said list:

It is said by the Plaintiffs that features (a) and (d) (which are substantially the same) are really in their favour and that it would be wrong to refuse a licence simply because they wanted to permit the playing of cards.

5. However, Mr. Swaine for the Plaintiffs does not dispute that the issue of a licence lies within the discretion of the Commissioner, for that is expressly provided in s.13(6): his submission is that the discretion is not unfettered. He seeks support for that contention from the fact that by the Gambling (Amendment) Ordinance 1973 that subsection was amended by the deletion of the word "absolute" which had previously appeared before "discretion". For my part I doubt whether this amendment has made any difference to the interpretation of the subsection, but I still have to decide whether the Plaintiffs have established any breach of duty by the Commissioner in performing his statutory duty. The difficulty, of course, is to define that statutory duty. In Breen v. Amalgamted Engineering Union 1971 2 Q.B. 175, 190 Lord Denning, M.R. said:

"It is now well settled that a statutory body, which is entrusted by statute with a discretion, must act fairly. It does not matter whether its functions are described as judicial or quasi-judicial on the one hand, or as administrative on the other hand, or what you will. Still it must act fairly. It must, in a proper case, give a party a chance to be heard: see In re H.K. (An Infant) [1967] 2 Q.B. 617, 630 by Lord Parker, C.J. in relation to immigration officers; and Reg. v. Gaming Board for Great Britain, Ex parte Benaim and Khaida [1970] 2 Q.B. 417, 430 by us in relation to the gaming board. The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith; nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food [1968] A.C. 997 which is a landmark in modern administrative law".

What is said here is that the duty to act fairly under s.13 requires the giving of reasons and that, having regard to the absence of formal reasons and to the reasons hinted at in Mr. Wong's affidavit, it is an inevitable inference that the Commissioner had regard to irrelevant considerations. Lord Denning went on to state the problem in such cases as follows:

".... ought such a body, statutory or domestic, to give reasons for its decision or to give the person concerned a chance of being heard ? Not always, but sometimes. It all depends on what is fair in the circumstances. If a man seeks a privilege to which he has no particular claim - such as an appointment to some post or other - then he can be turned away without a word. He need not be heard. No explanation need be given: see the cases cited in Schmidt v. Secretary of State for Home Affairs [1969] 2 Ch. 149, 170-171. But if he is a man whose property is at stake, or who is being deprived of his livelihood, then reasons should be given why he is being turned down, and he should be given a chance to be heard. I go further. If he is a man who has some right or interest, or some legitimate expectation of which it would not be fair to deprive him without a hearing, or reasons given, then these should be afforded him, according as the case may demand. The giving of reasons is one of the fundamentals of good administration. Again take Padfield's case [1968] A.C. 997. The dairy farmers had no right to have their complaint referred to a committee of investigation, but they had a legitimate expectation that it would be. The House made it clear that if the Minister rejected their request without reason, the court might infer that he had no good reason: and, that if he gave a bad reason, it might vitiate his decision".

6. It is often difficult to be dogmatic as to the fairness or unfairness of a particular course of action, although there are cases where no real doubt can exist. The Plaintiffs concede that they were seeking from the Commissioner a privilege rather than a right, but they rightly say that that does not deprive them of the protection of fair dealing. It does, however, mean that the Commissioner could discharge his duty of acting fairly without necessarily having to do all that he might otherwise have been required to do. Sometimes a statute will contain provisions which indicate that "fairness" involves a particular action by the person vested with a discretion. Thus in Reg. v. Gaming Board, Ex parte Benaim [1970] 2 Q.B. 417 the relevant statute said in terms that the Gaming Board in determining whether it would grant a certificate consenting to a person's applying for a licence under the Act "shall have regard only" to a specified question. It was held that that required the Board to give an applicant an opportunity of satisfying them on that question and that that in turn required them "to let him know what their impressions are so that he can disabuse them". However, the court further held that if the applicant had been given sufficient indication of the objections raised against him such as to enable him to answer them the Board would not have been bound to give their reasons for refusing a certificate. In that case at a meeting lasting four hours the Gaming Board discussed with the applicants the matters which were troubling them and Mr. Swaine says that if the Commissioner had done in the present case what the Gaming Board had done there he would have had nothing to argue. Mr. Johnson for the Attorney General seeks to distinguish that case on the ground that our Ordinance does not expressly limit the matters which the Commissioner is entitled to consider. Is that a sufficient distinction? Even where there is no express limitation on the exercise of a discretion a statutory body must not take into consideration matters which are manifestly irrelevant and if it should appear that it has done so this Court will interfere. However, as appears from the second passage cited above from the judgment of Lord Denning in Breen v. Amalgamated Engineering Union it is not open to the court to infer an absence of good reason from the silence of a statutory body in a case where the applicant is seeking a privilege to which he has no particular claim. Putting it in another way, where the statute is silent as to the matters which must be considered the court will assume that the body exercising the discretion has not acted in an arbitrary and totally unreasonable manner in the absence of any ground for concluding that it has: see Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation 1947 2 All E.R. 680, 682.

7. In the present case the Commissioner has received representations on behalf of the Plaintiffs on three separate occasions. One can understand that the Plaintiffs feel aggrieved that their application has been refused with no reasons formally assigned: they naturally think they are fit and proper persons to have a licence and that their club is no less suitable than most, if not all, of the places known to have been licensed. However, before the Court can intervene they must establish a prima facie case of misuse of power. In Reg. v. Governor of Brixton Prison, Ex parte Soblen 1963 2 Q.B. 243 the Court of Appeal accepted that, if the applicant could sow such substantial and disquieting doubts in the mind of the court about the bona fides of the order being challenged that the court considered that some answer was called for, then a failure to provide a satisfactory answer would result in the order's being set aside. That was a case where it was suggested that a deportation order under the Aliens Order 1953 was being used as a device to obtain an unauthorised extradition. The court found no prima facie evidence of mala fides. Here I find no ground for suspecting mala fides. The other case much relied upon by the Plaintiffs, Padfield v. Minister of Agriculture, Fisheries and Food 1968 A.C. 997, seems to me distinguishable in that not only did the applicants have interests which were threatened but the court was able to infer that the Minister had based his decision entirely on considerations which were irrelevant to the exercise of his discretion. Here, as I have said, it is conceded that the Plaintiffs are seeking a privilege. Moreover, despite the argument of counsel for the Plaintiffs I cannot say that there was no possible reason sufficient to justify the Commissioner's refusing the Plaintiffs a licence. In my view the Commissioner was not bound to give reasons for his refusal, but the affidavit of Mr. Wong seems to me to amount to a statement of reasons. I think that the facts that the Plaintiffs were a private club and that the public would not have access to the club house could not constitute a reason which anyone could reasonably say was sufficient ground for refusing a licence or even relevant to such refusal: I agree with Mr. Swaine that the control exercisable over private places must be greater than that exercisable over places accessible to any member of the public It has not been suggested how the limitation of licences to public places would in any way further the objects of this legislation. However, the Commissioner appears to think that there would be some special vice in the playing of cards and that is not a matter which I can say is necessarily wrong. It would not be open to me to substitute my discretion for that of the Commissioner.

8. We are left in the position that the Commissioner has given one reason which could be sufficient ground for his refusal to grant a licence and one reason which could not. That is akin to the position with which the Divisional Court was faced in Paultons Square Propertions Ltd. v. London County Council (1965) 63 L.G.R. 159. In that case the court interpreted the statement of the Minister's reasons as indicating that the two reasons given, one good and one possibly bad, were quite independent and not cumulative and for that reason the court upheld the Minister's dismissal of the appeal made to him. Here there are no indications which enable me to say with certainty that the Commissioner would in any event have refused a licence solely on the basis that the Applicants wished to be licensed to permit card games, however much I may suspect that he would. That being so, I think the Plaintiffs are entitled to a declaration in the sense of para.(b) of the Originating Summons but I do not consider that any further declaration is necessary.

9. There will be judgment accordingly.

31st July 1975.

Representation: